Minneslate Logo

SF3311 (Legislative Session 94 (2025-2026))

Corporate franchise tax rate contingent increase authorization

AI Generated Summary

Purpose of the Bill

The bill aims to modify the taxation structure for corporate franchises in Minnesota. Specifically, it addresses potential adjustments to the corporate franchise tax rate contingent on changes in federal tax legislation.

Main Provisions

  • Corporate Franchise Tax Rate Calculation:
    • For tax years starting after December 31, 2024, corporations will pay a franchise tax based on the higher of two rates: 9.8% or a calculated rate.
  • Contingent Tax Rate Adjustment:
    • The calculated rate involves a potential increase, determined by any decrease in the federal corporate tax rate. This is derived from comparing the federal rate effective on March 23, 2025, with the previous rate.
    • Any decrease in the federal tax rate under section 11(b) of the Internal Revenue Code leads to a proportionate increase in the Minnesota state tax rate, rounded to the nearest twentieth of a percent.

Significant Changes to Existing Law

  • The bill introduces a mechanism to automatically adjust the Minnesota corporate franchise tax rate in response to federal tax reductions. This ensures that Minnesota maintains its tax revenue irrespective of federal changes.

Relevant Terms

corporate franchise tax, tax rate, taxable income, federal tax rate, Internal Revenue Code, contingent tax increase.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
April 06, 2025SenateFloorActionIntroduction and first reading
April 06, 2025SenateFloorActionReferred toTaxes
April 22, 2025SenateFloorActionAuthor stricken
April 22, 2025SenateFloorActionAuthor stricken

Citations

 
[
  {
    "analysis": {
      "added": [
        "A mechanism for adjusting the tax rate based on changes to federal law."
      ],
      "removed": [
        ""
      ],
      "summary": "The bill proposes changes to the corporate franchise tax rate in Minnesota under section 290.06 subdivision 1.",
      "modified": [
        "Revises the calculation method for corporate tax rates after December 31, 2024."
      ]
    },
    "citation": "290.06",
    "subdivision": "subdivision 1"
  }
]

Sponsors